The Global Investment Issue
By Jean Pisani Ferry via Caixin | Investment in many advanced and emerging economies is down – except in China – but governments around the world can take steps to improve the situation.
World economy
Israel-Palestine: violence continues to escalate
MADRID | By Álex García.
China: “Growth has stabilized, but strong recovery unlikely”
SHANGHAI | Op-ed by Hong Hao at Caixin | Relaxing restrictions on property purchases, reintroducing discount mortgages or even further monetary easing are likely, given the importance of the property sector in the economy and its multiplier effects. No one is willing to be held responsible for an ugly crash in China. This is one certainty among the many uncertainties that the market is facing. But nor is anyone willing to inflate the property bubble further.
Why you should care about income inequality- No matter how irreverent or serious you are
MADRID | The Corner | New York-based British comedian John Oliver, well known for his hilarious parodies of economic issues (if you haven’t seen his Dodd Frank Act impersonation, you definitely should- sorry for the poor quality of this video), has digged in US growing wealth gap and why it may be a problem in the future. Indeed, income flows are becoming increasingly unequal and that’s undermining growth.
Q2 Earnings preview – easier FX, sequentially a bit better growth and hurdle rate has come down
MADRID | By The Corner | Yet again this year equities have moved higher despite negative EPS revisions. While JPMorgan started the year with a constructive outlook on equity markets, they believed that for the 4th year in a row IBES projections would need to be downgraded. The investor concern now is that negative revisions could continue into H2, similar to the trend observed in Europe in each of the last three years.
Mexico: ten-year, €18bn investment opportunity for EU Utilities
LONDON| By UBS analysts | Mexico is the eleventh largest country in the world by population. Yet, when it comes to energy infrastructure and consumption per capita, it ranks poorly especially compared to developed, western regions. The energy policy recently introduced provides a major capex opportunity: about €100bn over the coming ten years. Estimates for EU utilities reach investments of €18bn, which would allow for a potential net income increase of €1.1bn. In this context, most of the companies eyeing the region are from Southern Europe, with Enel and Iberdrola remaining as the sector top picks.
Where does $2 Trillion in subsidies for the wealthiest hide? Capital gains tax breaks
WASHINTON, DC via Next New Deal | By Harry Stein | Nobel-winning economist Joseph Stiglitz takes a hard look at subsidies for investment income. He advocates taxing capital gains and dividends at the same rates as ordinary income. Under current law, the federal government will deliver an estimated $1.34 trillion in subsidies to investors over the next 10 years in the form of reduced tax rates for capital gains and dividends. Sixty-eight percent of that money will go to the top 1 percent. Stiglitz argues that there is “no justification for taxing those who work hard to earn a living at a higher rate than those who derive their income from speculation.”
The Brazilian Street: Powers of Change
The Brazilian government can spend $11.5 billion on the World Cup, but they must had an empty wallet when it came to spending money on education, health care and transport. Therefore, Brazilians themselves can be the drivers of change if they are united.
IMF doubles Spain’s growth forecast but warns on unemployment
MADRID | By Jaime Santisteban | The Washington-based institution believes Spain has turned the corner and “the recovery reflects the collective efforts of Spanish society,” highlighting fiscal, banking and labour reforms. Forecasts (a 1.2% GDP hike this year and 1.6% in 2015) respond to the significant improvement of the country’s economy since the beginning of the year, surpassing government and experts’ estimates.
“We’ll see zero credit growth in the Monetary Union in the next 2 years”
WASHINGTON | By Pablo Pardo | Mark Zandi is chief economist at Moody’s Analytics, the department in charge of consulting, advising and providing services for businesses and financial institutions. Among its many activities, the firm advices several European banks with regard to the EBA’s and ECB’s stress tests. Moody’s created this department in 2007, after buying Economy.com –Zandi’s analysis company.